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REVENUE
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
REVENUE

NOTE 6 - REVENUE

 

Revenue Recognition and Contract Accounting

 

The Company generates revenue from four sources: (1) Technology Systems; (2) AI Technology which is included in the consolidated statements of operations line-item Technology Systems; (3) Technical Support; and (4) Consulting Services which is included in the consolidated statements of operations line-item Services and Consulting.

 

Contract assets and contract liabilities on uncompleted contracts for revenues recognized over time are as follows:

 

Contract Assets

 

Contract assets on uncompleted contracts represent revenues recognized in excess of billings and/or cash received on uncompleted contracts accounted for under the cost-to-cost input method, which recognizes revenue based on the ratio of cost incurred to total estimated costs.

 

At September 30, 2022 and December 31, 2021, contract assets on uncompleted contracts consisted of the following:

 

          
  

September 30,

2022

  

December 31,

2021

 
Cumulative revenues recognized  $4,054,703   $5,266,930 
Less: Billings or cash received   3,230,316    (5,263,481)
Contract assets  $824,387   $3,449 

 

Contract Liabilities

 

Contract liabilities, on uncompleted contracts represent billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the cost-to-cost input method, which recognizes revenues based on the ratio of the cost incurred to total estimated costs.

 

Contract liabilities on services and consulting revenues represent billings and/or cash received in excess of revenue recognizable on service agreements that are not accounted for under the cost-to-cost method.

 

At September 30, 2022 and December 31, 2021, contract liabilities on uncompleted contracts and contract liabilities on services and consulting consisted of the following:

 

               
   

September 30,

2022

    

December 31,

2021

  
Billings and/or cash receipts on uncompleted contracts   $ 5,653,169     $ 4,273,726  
Less: Cumulative revenues recognized     (2,451,836 )     (3,041,088 )
Contract liabilities, technology systems     3,201,333       1,232,638  
Contract liabilities, services and consulting     679,089       596,673  
Total contract liabilities   $ 3,880,422     $ 1,829,311  

 

Contract Liabilities at December 31, 2021 were $1,232,639, all of which has been recognized as of September 30, 2022.

 

The Company expects to recognize all contract liabilities within 12 months from the consolidated balance sheet date.

 

Disaggregation of Revenue

 

The Company is following the guidance of ASC 606-10-55-296 and 297 for disaggregation of revenue. Accordingly, revenue has been disaggregated according to the nature, amount, timing and uncertainty of revenue and cash flows. We are providing qualitative and quantitative disclosures.

 

Qualitative:

 

  1. We have four distinct revenue sources:

 

a.Technology Systems (Turnkey, engineered projects);

 

b.AI Technology (Associated maintenance and support services);

 

c.Technical Support (Licensing and professional services related to auditing of data center assets); and

 

d.Consulting Services (Predetermined algorithms to provide important operating information to the users of our systems).

 

  2. We currently operate in North America including the USA, Mexico and Canada.

 

  3. Our customers include rail transportation, commercial, government, banking and IT suppliers.

 

  4. Our contracts are fixed price and fall into two duration types:

 

  a. Turnkey engineered projects and professional service contracts that are less than one year in duration and are typically two to three months in length; and

 

  b. Maintenance and support contracts ranging from one to five years in length.

 

  5.

Transfer of goods and services are over time.

 

  6.   Goods delivered at point in time.

 

  Quantitative:

 

For the Three Months Ended September 30, 2022

  

                         
Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                         
                          
North America  $3,765,312   $32,821   $23,245   $200,860   $4,022,238 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $2,689,393   $—   $3,024   $—   $2,692,417 
Maintenance and Support   1,075,919    32,821    20,221    183,378    1,312,339 
Algorithms   —    —    —    17,482    17,482 
   $3,765,312   $32,821   $23,245   $200,860   $4,022,238 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $2,689,393   $—   $3,024   $—   $2,692,417 
Goods delivered at point in time   —    —    —    17,482    17,482 
Services transferred over time   532,250    32,821    20,221    183,378    768,670 
Services delivered at point in time   543,669    —    —    —    543,669 
   $3,765,312   $32,821   $23,245   $200,860   $4,022,238 

 

For the Three Months Ended September 30, 2021

 

Segments  Rail   Commercial   Government   Banking   IT Suppliers   Artificial Intelligence   Total 
Primary Geographical Markets                                   
                                    
North America  $1,303,662   $45,547   $52,866   $(3,288)  $945   $340,725   $1,740,457 
                                    
Major Goods and Service Lines                                   
                                    
Turnkey Projects  $984,313   $—   $32,645   $—   $—   $136,192   $1,153,150 
Maintenance and Support   319,349    45,547    20,221    (3,288)   945    204,533    587,307 
                                    
   $1,303,662   $45,547   $52,866   $(3,288)  $945   $340,725   $1,740,457 
                                    
Timing of Revenue Recognition                                   
                                    
Goods transferred over time  $984,313   $—   $32,645   $—   $—   $136,192   $1,153,150 
                                    
Services transferred over time   319,349    45,547    20,221    (3,288)   945    204,533    587,307 
   $1,303,662   $45,547   $52,866   $(3,288)  $945   $340,725   $1,740,457 

  

For the Nine Months Ended September 30, 2022

  

                     
Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                         
                          
North America  $8,087,759   $76,818   $214,124   $699,995   $9,078,696 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $5,885,477   $(498)  $153,462   $—   $6,038,441 
Maintenance and Support   2,202,282    77,316    60,662    465,223    2,805,483 
Algorithms   —    —    —    234,772    234,772 
   $8,087,759   $76,818   $214,124   $699,995   $9,078,696 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $5,885,477   $(498)  $153,462   $—   $6,038,441 
Goods delivered at point in time   —    —    —    234,772    234,772 
Services transferred over time   1,545,578    77,316    60,662    465,223    2,148,779 
Services delivered at point in time   656,704    —    —    —    656,704 
   $8,087,759   $76,818   $214,124   $699,995   $9,078,696 

 

 

For the Nine Months Ended September 30, 2021

 

Segments  Rail   Commercial   Government   Banking   IT Suppliers   Artificial Intelligence   Total 
Primary Geographical Markets                                   
                                    
North America  $3,527,736   $158,989   $198,153   $22,473   $134,717   $501,811   $4,543,879 
                                    
Major Goods and Service Lines                                   
                                    
Turnkey Projects  $2,311,530   $—   $137,490   $1,537   $—   $—   $2,450,557 
Maintenance and Support   1,216,206    158,989    60,663    20,936    —    208,519    1,665,313 
Data Center Auditing Services   —    —    —    —    131,537    —    131,537 
Software License   —    —    —    —    3,180    —    3,180 
Algorithms   —    —    —    —    —    293,292    293,292 
   $3,527,736   $158,989   $198,153   $22,473   $134,717   $501,811   $4,543,879 
                                    
Timing of Revenue Recognition                                   
                                    
Goods transferred over time  $2,311,530   $—   $137,490   $1,537   $131,537   $208,519    2,790,613 
Services transferred over time   1,216,206    158,989    60,663    20,936    3,180    293,292    1,753,266 
   $3,527,736   $158,989   $198,153   $22,473   $134,717   $501,811   $4,543,879